Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates

Not in Labor Force, but Want a Job Now: down -130,000 from 5.561 million to 5.431 million

Part time for economic reasons: up +107,000 from 5.219 million to 5.326 million

Employment/population ratio ages 25-54: up +0.1% from 78.4% to 78.5%

Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.04 from $21.99, to $22.03, up +2.3% YoY. (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

Holding Trump accountable on manufacturing and mining jobsTrump specifically campaigned on bringing back manufacturing and mining jobs. Is he keeping this promise?

Manufacturing jobs rose by +1,000 for an average of +2000 vs. the last severn years of Obama's presidency in which an average of 10,300 manufacturing jobs were added each month.

Coal mining jobs were unchanged for an average of +200 vs. the last severn years of Obama's presidency in which an average of -300 jobs were lost each month

April was revised upward by +33,000. May was also revised upward by +14,000, for a net change of +47,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mainly positive.

the average manufacturing workweek rose +9.1 hour from 40.7 hours to 40.8 hours. This is one of the 10 components of the LEI.

the number of people unemployed for 5 weeks or less increased by +151,000 from 2,154,000 to 2,305,000. The post-recession low was set 18 months ago at 2,095,000.

Other important coincident indicators help us paint a more complete picture of the present:

Overtime was unchanged at 3.3 hours.

Professional and business employment (generally higher- paying jobs) increased by +35,000 and is up +624,000 YoY.

the index of aggregate hours worked in the economy rose by 0.5 from 106.9 to 107.4

the index of aggregate payrolls rose by +0.8 from 134.0 to 134.8.

Other news included:

the alternate jobs number contained in the more volatile household survey increased by +190,000 jobs. This represents an increase of 1,560,000 jobs YoY vs. 2,238,000 in the establishment survey.

Government jobs rose by +35,000 .

the overall employment to population ratio for all ages 16 and up rose +0.1% from 60.0% to 60.1 m/m and is up +0.5% YoY.

The labor force participation rate rose +0.1% m/m and is up +0.1% YoY from 62.7% to 62.8%.

SUMMARY

The best thing about this report was the headline number of jobs added, plus the big positive revisions to April and May, which brought the average of the last three months to +191,000. Most of the leading internals were also positive, suggesting the positive headline news should continue over the next six months. Those not in the labor force but who want a job now also declined to a post-recession low (but still elevated by nearly 1 million above the late 1990s boom.)

While the unemployment and underemployment rates went up, this was balanced by the increase in labor force participation rate.

One weak spot was that involuntary part-time employment increased slightly. Also, politically, Trump has so far actually *underperformed* Obama in the net for manufacturing and coal mining jobs.

But the one big negative -- broken record here -- was wages, which have now grown only +2.3% YoY for nonsupervisory workers. So while this a a very good late cycle report, my fears are increasing about how bad it will be for workers when the next recession does hit.

While we are waiting for tomorrow's employment report, here's a little something to chew on.

In the immediate aftermath of the Presidential election -- as in, by the end of that week -- Gallup's measure of economic confidence soared, from its 2016 average of roughly -10 to a positive number and to nearly +10 by the end of November:

In fact, while the confidence of Democrats sank, the confidence of GOPers skyrocketed even more.

Since I have very little faith in the GOP agenda to deliver any uptick in growth, I have been watching and waiting for this confidence to ebb. It did somewhat beginning in March, but never to the point of coming close to that in the final year of Obama's term. (For the doubters, consider George W. Bush's economic policies. Despite being the most right-wing since the 1950s, we had the weakest post-War jobs and wage growth on record, and a weak GDP to boot. Where was the trickle-down?)

Until last week. Last week Gallup's economic confidence index fell to -7:

As shown in the graph, it has since rebounded. But it appears that after half a year of accomplishing absolutely nothing legislatively, the reality that the economy really hasn't changed at all -- in fact it may be waning just a bit -- is beginning to sink in.

Tuesday, July 4, 2017

In lieu of a more traditional Independance Day post, in view of the fact that the economic expansion turned 8 years old this week, I thought I would take a moment to highlight how far we have come. Because as mediocre as some things are, we have come a long, long way since the dark days of June 30, 2009.Unemployment has fallen from a high of 10.0 to 4.2%, and underemployment has fallen from 17.1% to 8.4%:

Over 16 million jobs have been added since the bottom in February 2010:

As of May, real median household income just made a new high (h/t Doug Short):

Since this statistic is skewed by the increasing share of households headed by retirees, the odds are pretty good that working age real median household income is actually doing a little better.In real terms, the amount of wages paid out to regular nonsupervisory workers has increased by about 22%:

Finallly, real GDP per capita has increased by 11%:

None of this is stellar. In particular, I wish that wage growth were more stout.But when you compare where we were then with where we are now, there's no contest. So Happy 4th of July, economy!

Monday, July 3, 2017

There has been a spate of Doomish commentary recently (for example, here) claiming that the stalling of commericial and industrial loan growth means that we are heading into, if not already in, a recession.

Aside from the fact that typically in the past, YoY commerical and industrial loan growth has been a lagging rather than leading indicator, bottoming out well after recessions have ended, over the weekend I was cleaning out some old saved material when I came across the following graph dating from the first quarter of 2015. The graph compared the percentage of senior loan officers reporting tightening of standards (right scale) for commercial and industrial loans (lagged 6 quarters) to the YoY% change in commercial and industrial loans (left scale):

The relationship forecast that YoY commercial and industrial loans were going to decelerate to about +5% YoY. I wish I knew whose graph it was, because I would sure like to give them proper kudos! Because that is exactly what has happened since (note that FRED does not permit me to lag one series of data):

Commercial and industrial loans have flatlined, just as forecast by the writer in Q1 2015.

Note, of course that in the last three quarters, the Senior Loan Officers have reported a slight loosening of standards, which suggests that commercial and industrial loans will continue to flatline through about the end of the year, and improve in 2018.

Finally, I have recently noted that the weekly Chicago National Financial Conditions Index does a decent job of forecasting the direction of the Senior Loan Officer Survey itself. So here is the Chicago NFCI vs. YoY commercial and industrial loans:

The Chicago weekly survey is forecasting a continued improvement in the Senior Loan Officer Survey when it is reported for Q2 in about a month.

The Lifetime Income Security Solution

How to Achieve and Protect Your Financial Goals

The Lifetime Income Security Solution

This book provides a straightforward methodology to achieve and protect your financial goals. It not only explains why an income-based investment strategy is superior to active management but also how to utilize certain deferred compensation strategies to better time income recognition. Finally, there is an overview of a simple and realistic asset protection methodology that relies less on hype and more on an honest appraisal of asset protections true capabilities. Concise and conversationally written, this book is a must for high net worth individuals and investment advisers.